IKEA France occupies a special place in the world of the major furniture and decoration chains. An unlisted company and heir to the vision of its founder Ingvar Kamprad, the company is coping well with the changes imposed on it by phygital and the post-Covid era of e-commerce. Emma Recco, Director of Strategy and Development for the Swedish group's French subsidiary, takes a look at the major challenges facing the retailer and the projects currently underway.
The first half of 2023 will come to an end in a few weeks' time. Is IKEA France on track to meet the targets set for the period?
Emma Recco: We are very confident, despite a challenging environment. We ended 2022 with sales of €3.2 billion, 20% of which was generated online. For 2023, which is already well under way, our results are in line with our growth targets, particularly in terms of sales volume. We have even exceeded our pre-pandemic revenue levels. We are fortunate to operate in an area that touches on the world of the home, which is regarded as a safe haven. What's more, the home has become a living space where a large number of activities have developed, such as teleworking and sport.
What are your CSR priorities for 2023?
E.R.: We want to encourage as many people as possible to adopt a healthier, more sustainable lifestyle by promoting everything to do with circularity. We have committed to selling only eco-designed products by 2030. They will be made from recycled or renewable materials. Since 2014, we have been offering our customers the chance to buy back their products, which we then sell in our second-hand shops at the same price as when we bought them. A few months ago, we decided to step up the pace by adding an online simulator so that people interested in this approach can find out the price at which IKEA could take back the product they bought from us. The revenue we generate from second-hand spaces amounts to 1% of our total sales, or nearly €32 million. As far as energy is concerned, two thirds of our shops and depots are equipped with photovoltaic roofs. Our lighting has been 100% LED for several years now, and the IKEA Group has invested in around forty wind turbines in France to produce energy from renewable sources. The few remaining gas-fired boilers are set to disappear, gradually being replaced by heat pumps. By 2025, all customer deliveries will be made by an electric fleet. Since December, we have been making our customer deliveries on the Seine, with the last kilometre covered by electric vehicles. Finally, on a social level, we guarantee the principles of equality, fairness, inclusion and diversity within our company. IKEA France has achieved the maximum score of 100/100 on the gender equality index*. We help the most disadvantaged, in particular by combating poor housing through partnerships such as the one we have with the Abbé Pierre Foundation. In addition, over 180 refugees have been trained by IKEA as part of an ad hoc programme, and 70% of them have subsequently been recruited.
We want to encourage as many people as possible to adopt a healthier, more sustainable lifestyle by promoting everything to do with circularity. Emma Recco, Director of Strategy and Development for the Ikea Group's French subsidiary.
What is your vision of the major challenges facing retailers?
E.R : Tomorrow's retailing will be more virtuous, both because we have to take responsibility, but also because we have to respond to the needs of consumers, which are changing very rapidly. In this respect, I'd like to mention four major challenges. The first is to think about tomorrow's retailing and its profitability, by integrating circularity into our product offering (second-hand, eco-design, etc.). This transition also raises many questions about the reparability, traceability and durability of products. The second challenge concerns services. With the development of apps, online sales sites, small-format shops and pick-up points, services are multiplying, often leading to more deliveries too. So we need to develop solutions that meet customers' needs while respecting the imperatives of sustainability (a fleet of vehicles that is as green as possible, for example). The third challenge is to ensure that the different sales channels complement each other. The omnichannel model implies having the right channel, the right format in the right place, while guaranteeing maximum fluidity between all these channels for the customer, who in turn interacts with a brand or a company. The experience must be a quality one from start to finish. Finally, the fourth challenge is more to do with human resources. Retail is a highly innovative sector. So we need to develop our staff and train them to ensure that they adopt the new technological tools properly, because investing in digital is pointless if the tools are not used. Another related point is the need to know how to attract, cultivate and retain talent, the right profiles being those that reflect today's society.
What is the company's omnichannel strategy?
Omnichannel is important, but it's not an end in itself. It's a way of satisfying customers who want to buy when they want, where they want and how they want. With the boom in internet sales, online sales have quadrupled in three years. However, we still believe strongly in physical shops, where almost 80% of our transactions take place. French consumers are attached to them: they come to see the world, the people, they need that experience. We are continuing to invest in our existing shops, expanding their logistics capacity, as well as in new, smaller outlets. At the same time, we are adding digital elements to the customer experience in our physical shops. For example, we have introduced an immersive dimension to our design workshop on Avenue Daumesnil in Paris, with the recreation of more than 80 model environments enhanced by QR codes, information and life-size products. Conversely, when we're in contact with a customer who doesn't want to travel, we can offer them the chance to talk to us remotely via screen-sharing to show them solutions. All in all, we're adding the human touch to digital, and bringing digital into the physical shop. The idea is to blur the boundaries and develop complementary channels.
So the offer has become more segmented?
The IKEA model was built on these large out-of-town shops with absolutely everything under the same roof: inspiration, advice, expertise, furnishing solutions and stock. But in the space of a few years, we've increased the number of hyperurban outlets and developed a wide range of services. Today, we can interact with our customers in a multitude of ways, and things have become much more complex. You still have customers who come into the shop, but you also have those who travel to the store and want their order prepared, or want express delivery, or even next-day delivery, and so on. There are also customers who come to the shop, go home and then order online with an order preparation service. These customers can also come back to collect their products. This requires a tool for orchestrating stocks and deliveries to best meet customer demand.
The idea of the small-format shop is to have an outlet in the city centre to provide advice in a very urban environment.
Has the crisis slowed down your customers' purchases significantly? And what countermeasures have you put in place in response?
As I mentioned earlier, the home is a safe haven. The French continue to invest in their homes at different stages in their lives. On the other hand, in times of inflation, consumers may have to make trade-offs between buying a piece of furniture, a trip, etc., or even postpone spending altogether. They may also choose to redecorate their home at a lower cost by investing in decorative accessories. To try and mitigate the effects of inflation on household budgets, fractional payments represent a real opportunity. For some months now, we have been offering payment in 20 instalments and 30 instalments free of charge, and we have lowered the minimum purchase threshold for access to these facilities. We cover the credit charges. However, I think it's vital that we continue to work on our offer. The IKEA model is completely integrated: all the products sold are developed by us. For many years, we have been working on what we call "democratic design". Every time a designer works on a product upstream, he or she will take into account the five dimensions of democratic design: functionality, aesthetics, quality, price and durability.
What growth drivers are you looking to develop?
We're big believers in physical shops and small formats. IKEA is present on the French market via 43 shops, seven of which are small format, located in urban areas and supplemented by five central depots to meet the various logistical needs (deliveries to sales outlets and customers). The idea behind the small formats is to have a base in town centres to provide advice in very urban areas, but also to support projects that are a little more complicated, such as the design of kitchens, dressing rooms and bathrooms. The development of digital technology and circular business are also growth drivers that we believe in, as is the boom in professional customers. We are obviously looking to attract new customer segments such as millennials, and to build loyalty among all our customers by developing programmes such as IKEA Family, which already has millions of members.
Do you innovate with your suppliers?
When our designers develop products, they work a lot with suppliers because they are the ones with the knowledge and skills. They master the production tools. The resulting co-creation results in optimised solutions in terms of manufacturing, packaging and choice of materials. Our Pax cabinet has been one of our flagship products for over 20 years, and new references will soon be launched with assembly time cut by a factor of four. All you need is an Allen key. And the production plant is located in France. It's very virtuous!
* The Group is a member of the Equal Pay International Coalition (EPIC).
Her background:
Born in 1973. A lawyer by training, Emma Recco is a graduate of Toulouse University of Social Sciences and ESSEC Business School. In 1999, she began her career in human resources at IKEA. She then took on operational responsibilities, managing a shop in Toulouse for 6 years. In 2014, she took over as Head of Real Estate/Expansion and worked on the development of new formats (Paris la Madeleine shop). In 2019, she was appointed Managing Director in charge of strategy. At the same time, she joined the IKEA France comex. She is in charge of expansion, innovation, transformation and sustainable development.